We’re getting closer to the end of the pandemic and investors are preparing for the post-Covid era. In the emerging new normal cryptocurrencies are beating many expectations. For the first time Bitcoin exceeded $50,000 and $1tr market cap.
Bitcoin – corporate adopters
Bitcoin, the most traded cryptocurrency has started the year unstoppably.
- Elon Musk, Tesla, announced it would invest $1.5bn in Bitcoin and begin accepting Bitcoin as a form of payment soon.
- Uber mentioned it will consider accepting crypto, including Bitcoin, as a form of payment.
- Mastercard announced it will start supporting select cryptos this year, including stablecoins, as it believes digital assets are becoming a more important part of the payments ecosystem.
- Visa announced it is piloting a series of API’s that will allow banks to offer Bitcoin services.
New All-Time-Highs (ATH’s) continue to be reached, passing $50,000 and on 22nd Feb Bitcoin passed $1tr market cap. The CEO and co-founder of cryptocurrency trading platform Bitpanda Eric Demuth believes “bitcoin is digital gold and in a lot of regards even better than physical gold (cheaper to store and move around; better divisibility; tamper-proof and verifiable). He believes “bitcoin will be a must-have asset in very investor’s – small or big – portfolio in 2025.”
Bitcoin and other cryptocurrencies only emerged just ten years. They are designed to work as a medium of exchange, using cryptography to secure and verify transactions as well as to control the creation of new units of a particular cryptocurrency. As a decentralized currency it can be transmitted globally, without commissions and without government controls. For Bitcoin this provides an alternative secure payments solution to traditional FIAT currency.
As Bitcoin has a limited supply (only 21m bitcoins can be created until 2140) this has helped drive the rise in cryptocurrency markets in late 2020 and early 2021.
According to Javier Molina, analyst at eToro
So far 18.6 million Bitcoins have been launched and since its creation they have lost about three million, with a maximum issuance horizon of 21 million. Unlike central banks with their expansive monetary policies to tackle the economic crisis and that they can issue what they want, in Bitcoin the figure is already closed: it is a rare commodity
The pandemic’s impact
Our historic dependency on traditional financial system has been called into question during the coronavirus crisis. Bitcoin has arguably provided a safe haven asset for investors as the next hedge against inflation. Uncertainty has caused institutions and people to seek alternative investments. Thanks to blockchain technology a new asset class is available that is more accessible, 24×7 and more effective. The interest, that previously corresponded to a niche, has become more mainstream during one of the most difficult years for the global economy.
Can we draw any conclusion?
Although the crisis caused by Covid-19 has done a lot of damage to the global economy, it has been positive by allowing a focus on new trends. New technologies such as blockchain and cryptocurrencies, have gained further traction by presenting themselves as solutions to this and other possible crises. Institutional, corporate and investor adoption is on the rise. The media has also highlighted the opportunities offered by Bitcoin and other Alt coins. We don’t know what exactly will happen to Bitcoin, or to the other current leading market-cap virtual currencies, but the interest of the media, retail customers and increasingly large companies in this asset class continues.